Canada may block LSE, Toronto merger over Dubai fears

Ontario’s Finance Minister says he’s unhappy about Dubai’s stake in $6.7bn merged exchange
Canada may block LSE, Toronto merger over Dubai fears
By Joanne Bladd
Sun 13 Feb 2011 10:56 AM

Ontario may move to block a proposed $6.7bn merger between the
London Stock Exchange and Canada's TMX, over fears Dubai will end up owning
11.3 percent of the new exchange.

Ontario’s Finance Minister Dwight Duncan said the idea Dubai
would be the largest single shareholder in the exchange raised political red flags
that could prompt the Canadian government to step in and derail the deal.

“We do business with the Middle East. I am just not sure I
want them owning our stock exchange,” Duncan told the Globe & Mail.

"Obviously that's something that governments at the
federal level have to contemplate. All we're saying is that is a strategic
asset in a strategic industry.

Borse Dubai saw its 20 percent stake in LSE gain more than
$25m overnight on news of the proposed merger, which would create the world’s fourth-largest
exchange.

The combined entity would become a top centre for trading
mining and energy shares, with $4.1 trillion of stock changing hands a year.

Under Canadian law, the province of Ontario can move to
block the stock exchange deal if it deems it not to be in the public interest.

 “I am just not going
to be one of those that says ‘okay, go ahead,’” Duncan told the paper.

His comments will be seen as the latest round in a
long-running diplomatic feud between the UAE and Canada, sparked by Ontario’s
refusal to grant new landing rights to UAE carriers.

Relations between the oil-rich UAE and Canada have
deteriorated rapidly since November, when Canada’s transport agency refused to
give Gulf carriers Etihad and Emirates fresh landing rights.

The Gulf state retaliated with the closure of Camp Mirage, a
secret military base located outside Dubai and used to supply Canadian troops
in Afghanistan.

The political feud took a new turn in December, when the UAE
Embassy announced Canadian citizens would no longer receive free visas.
Instead, tourists must now pay up to $1,000 Canadian dollars to enter the
country.

Canadian Prime Minister Stephen Harper last month accused
the UAE of attempting to capitalise on Ottawa’s operations in Afghanistan to
secure more landing rights for its flagship airlines.

“That’s just not how you treat allies, and I think tells us
you better pick your friends pretty carefully in the future,” he said.

For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.